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By Jim Carlton
Once upon a time, Apple Computer was the undisputed king of the computer industry, the leader in nearly all areas of technology and innovation. The time, actually, was not so long ago, but it sure seems like it now. In the span of just 10 years, Apple has fallen from that lofty pedestal to a position of near irrelevance in the industry it helped to create. Where once it commanded nearly one-fifth the world's personal computer sales, its share has dwindled to less than 4 percent. Where once its enormous profits were the envy of the entire industry, the company is now struggling to reverse a tide of red ink that has swollen to more than US$1.6 billion over the past two years. The question is constantly asked in business circles: How could a company with such great technology have fallen so far and so fast? As I outline in my book, Apple: The Inside Story of Intrigue, Egomania, and Business Blunders, the company's fundamental problem was its dearth of effective leadership almost from the outset. Steve Jobs is back in the limelight while Apple searches for a new CEO, but whoever that person is, they will still be haunted by the mistakes of their predecessors. The biggest of those mistakes was Apple's refusal to license its Macintosh software to the rest of the industry, as the following excerpt from my book reveals. Had Apple opened the Mac to all comers back in the '80s, when the software was still light years ahead of Microsoft in terms of ease of use and visual appeal, the hip pioneer undoubtedly would have gone on to dominate the industry instead of Microsoft. But, Apple squandered not one opportunity to license the Mac, but a succession of them. Ironically, Bill Gates himself tried to help, going so far as to pen a secret memo to Sculley and line up initial licensing prospects. Apple's lack of leadership, however, left the decision on whether to license, ultimately, up to the engineers. Not surprisingly, the engineers, led by the enigmatic Jean-Louis Gassée, proved far more interested in hoarding a technology they created than in establishing a standard the rest of the industry could follow. That mistake sealed Apple's fate, dooming the company to a downward spiral that it is still trying to overcome today.
The licensing debate
Steve Wozniak made a decision very early on at Apple that would prove one of the company's most fateful ever. When "Woz," a prank-loving 26-year-old who loved to tinker with machines, designed the very first Apple computer, he decided to use a microprocessor called the MOS Technology 6502, based on the design of Motorola Inc.'s 6800, essentially because it was cheaper than anything else he could find. Intel's 8080 chip was selling for $179 at the time, and Motorola's 6800 fetched $175. The MOS Technology chip, made by a Costa Mesa, California, company, cost only $25. The microprocessor itself looks insignificant. Also called a microchip, it is a tiny little piece of equipment no larger than a silver dollar. But it is critically important to a personal computer. Containing thousands of microscopic circuits etched onto tiny silicon wafers, the microchip is the very brain of the personal computer, controlling everything from the machine's processing speed to its ability to display images on a screen. Without one, the PC would sit useless on the desk. The decision to go with the Motorola technology was fateful, because Intel would gain the license from IBM to make the microchips that went into almost every IBM-compatible computer. Motorola was a big company in its own right, a giant in cellular phones and pagers. But Apple, which soon after that first design by Woz began using Motorola chips exclusively, became Motorola's only sizable customer for personal computer microprocessors. Intel's whole life, on the other hand, revolved around microchips. In fact, it had been a young Intel engineer named Marcian E. Hoff Jr. who had invented the microchip in 1971, making the PC revolution possible.
Jim Carlton ( jim.carlton@news.wsj.com) is a technology reporter for The Wall Street Journal. This article was excerpted from his book Apple: The Inside Story of Intrigue, Egomania, and Business Blunders , published in November by Times Books. Page
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